Spotlight on the economy: Claims, home sales data to point to improving economy

Sales of previously own homes and the number of Americans seeking unemployment benefits are the headline attractions on Thursday’s busy calendar. And the picture they are likely to paint is of a stable and mildly improving economy.

Existing home sales are forecast to hold steady in December at a 4.9 million annual rate, according to economists polled by MarketWatch. The report will be issued at 10 a.m. Eastern.

Higher mortgage rates, rising prices and a limited number of properties on the market have curbed sales since the end of the summer. Still, most economists predict sales will continue to climb in 2014 for the third straight year.

In a related report, the rise in home prices is likely to be confirmed by the Federal Housing Finance Agency. The FHFA will issue its November price index at 9 a.m. As of October, U.S. home prices had risen 8.2% vs. a year earlier.

Initial jobless claims, meanwhile, probably will rise slightly from 326,000 in the prior week. The weekly report has been very jumpy over the past few months because of the holiday season. While it does show layoffs remain low, it’s not all that reliable as a barometer of hiring trends.

“I don’t think initial claims gives us a good picture of the labor market,” said senior economist Jennifer Lee of BMO Capital Markets. “You have to look at a wide spectrum of job indicators.”

The latest claims report will also be the first to show the expiration of extended federal benefits for some 1.3 million Americans who were collecting them at the end of the December. Funding ran out on Jan. 1 and Congress is divided over whether to renew the program.

Also Thursday, a report on manufacturing and the leading economic index are expected to show the U.S. entered 2014 on an improved growth path.

The Markit PMI flash, a sort of manufacturing canary in the coal mine, registered a healthy 55.0 in December and is likely to remain near that level.

The leading economic index, for its part, strengthened in the second half of 2013 and a small gain is forecast for December.